|Posted by: Aussie Nov 6 2004, 05:03 AM
| Forgive me if this one has come up before and my search failed to find it.
I am Australian and neither a US resident nor a US citizen. I own a multifamily in NY and am buying more, cash. I want to refinance, preferably to about 80% LVT and preferably not at penalty interest rates or with huge fees. I'd then go out and buy more, as I'm starting to run out of cash. I don't mind leaving 20% hurt money in. The properties have net rental rates of around 30% of the gross purchase price and I calculate that expenses, including contingencies, should be about 50% of the income before debt servicing and tax.
However, I find that US banks are far les interested in investment property than Australian ones, and especially don't want to deal with foreigners (who aren't eligible for a social security number). I know of others in the same boat and some good clear advice on who is prepared to do business, and how I can attract loans (but not sharks) would be truly welcome.
|Posted by: loanuniverse Nov 6 2004, 10:47 AM
”… However, I find that US banks are far les interested in investment property than Australian ones, and especially don't want to deal with foreigners (who aren't eligible for a social security number). I know of others in the same boat and some good clear advice on who is prepared to do business, and how I can attract loans (but not sharks) would be truly welcome…..”
The banking environment has made it more difficult to deal with foreign investors than before. We certainly have to do a lot more background checks and keep more information about customers. This might turn off some bankers from working with foreigners.
However, there are good reasons why bank lenders do not like to lend to foreigners. The main one in my opinion is that our guarantor is outside our reach in case that the credit goes bad. The second one is that the lender can not review the guarantor’s credit history as readily as they can a US based guarantor. Finally, It is difficult to check the veracity of the personal financial statements. If I have a guarantor telling me that he owns a house worth a million dollars, and this house is one block away from mine then I know he is mistaken. How do I know what those assets are worth in Sidney?
Nevertheless, I see loans to foreigners all the time. One thing that would help would be if the owner of the property were a US based company. This way that company could apply for a FEI#. Not sure how that would affect your tax liability, you need to check with an accountant.
Frankly, the US dollar is so cheap that it might really be worth it to get this sorted out. Essentially, you need to talk to lenders in the area that you want to buy and see what it is that they would be comfortable with. Have you been buying the properties with cash? Twenty percent might be too low in your case; the lender might want to mitigate the guarantee problem with a lower loan-to-value.
|Posted by: Aussie Nov 6 2004, 03:49 PM
| Thanks for that.
I actually was buying as an LLC registered in NV, with an EIN, certificates of good standing and registered to trade in NY. Most lenders asked me to buy in my personal name instead! They didn't want to deal with an LLC. I couldn't do it as a C-Corp, becuase otherwise I'd face dual taxation, effectively equivalent to about 75%.
I understand the difficulties lenders face - it appears my credit in the US would be the same if I were a bankrupt in Australia or if I owned a swag of properties (the latter actually being the case).
I was hoping to find - or find a way to locate - lenders who would lend against the collateral value of the properties, the very high cashflow out of them etc, and treat the nature of any guaranty I offered as a secondary item.